Baltimore County Employees' Retirement System, Towson, Md., lowered its assumed rate of return on investments to 7.25% from 7.875%.
“We've been thinking about (lowering the rate) for a while,” said Keith Dorsey, the county's budget and finance director, and secretary of the board of trustees of the $1.96 billion retirement system. “We've been working with employee groups trying to lower our overall retirement costs, but returns were not meeting our valuation rate,” he said. For the 10 years ended Dec. 31, 2011, the fund returned an annualized 6.1%, he said.BCERS has had the 7.875% rate since 1993.
Mr. Dorsey said the board's decision at its meeting Tuesday was guided by an assessment from investment consultant NEPC and actuary Buck Consultants on the impact on future earnings of a post-retirement cost-of-living adjustments fund. The board kept the 7.875% for determining whether COLA payments can be made from that fund if earnings reach the higher rate.